Are property prices falling? Buy or wait in 2026

Romolo Marini · 2026-10-14

You have your eye on a flat, and the financing would be manageable. But there is a voice in the back of your mind: what if prices are lower in a year’s time? Then you would have paid too much. So is it better to wait?

We regularly hear this question in consultations, in one form or another. We will not answer it here with a prediction, because nobody can credibly make one. Instead, we show what the official data currently say, how prices and interest rates interact, and what waiting costs or delivers in three scenarios.

01“Standard land values are falling”: are property prices falling at the moment?

Germany’s Federal Statistical Office measures residential property prices using the House Price Index. It rose sharply until the second quarter of 2022, then fell by 12.9% by early 2024, and has been rising slowly since then. In the second quarter of 2026, it was 0.6% higher than a year earlier and 0.3% higher than in the previous quarter.

Sources: Eurostat, House Price Index for Germany, as at 1 October 2026; Federal Statistical Office, press release No. 336 of 24 September 2026.

The regional picture is mixed. In the second quarter of 2026, flats for purchase in the seven largest cities were 0.4% cheaper than a year earlier, while those in large cities with independent district status outside these metropolitan centres were 2.0% more expensive. In densely populated rural districts, flat prices fell by 1.8%. So there are markets where prices are falling and others where they are rising. Read more in our guide to the property bubble in Germany.

At the same time, interest rates are rising again. The European Central Bank raised its deposit facility rate in June and September 2026, most recently to 2.50%, while inflation stood at 3.3% in September. According to the Bundesbank, housing loans with a fixed-rate period of 5 to 10 years carried an effective interest rate of 3.58% in January 2026 and 3.81% in August.

02“Why is the interest rate so high?” Price and interest rate go hand in hand

People who wait are usually hoping for a lower price. But what matters for your monthly outgoings is the mortgage payment, and that depends on the interest rate just as much as on the price. The following table shows how much a flat could cost for the payment to stay the same at a different interest rate.

If the interest rate rises by half a percentage point, the price has to fall by 8.6% just for you to pay the same amount. If the interest rate falls by half a percentage point, the flat can cost over 10% more. A lower price with a higher interest rate is therefore not a bargain. It can even work out more expensive.

03What waiting from 2022 to 2024 would have achieved

A look back shows that this is not just theory. Suppose someone could have bought a flat for €300,000 in early 2022 but decided to wait for prices to fall. They were right: prices did indeed fall.

The buyer who waited saved €33,455 on the price but pays €5,391 more each year in mortgage payments for the duration of their fixed-rate period. That does not mean waiting is always wrong. It means that “prices are falling” is not a reason on its own, and that prices and interest rates often move in opposite directions.

04Buying today: an honest look at the figures

Before comparing scenarios, you should know what a typical rental flat costs today. Here is an example using figures from October 2026. Thomas is 44, single, has a taxable income of €85,000 and buys an existing flat. Thomas is fictional; the figures are an illustrative calculation, not a forecast.

Before tax, Thomas contributes €450 a month out of pocket; after tax, €236. Of this, €313 goes towards repaying the principal, so his outstanding debt falls faster than the amount he contributes. With no increase in value and no rent increases, this is the cost of owning a debt-free flat after around 34 years, if the interest rate were to remain unchanged throughout the loan term. Whether he can afford this amount over the long term, including during a vacancy or when repairs are needed, is the real buying decision.

The tax details: his rental income for tax purposes is −€5,480. His taxable income therefore falls from €85,000 to €79,520. Income tax falls from €24,564 to €22,262, and the solidarity surcharge from €501.47 to €227.53. Use the rental income and tax calculator to work out your own figures.

How much of your rent is left after tax? Work through your own figures.

05“Is there a chance it won’t work out exactly like that?” Three scenarios for waiting

Suppose Thomas waits two years. Here are three possible developments, none of which is an expectation.

Waiting pays off only in Scenario A, and even then only because the price and the interest rate both fall. If the interest rate rises as in Scenario C, Thomas pays €182 more a month, even though the flat has become only 3% more expensive. In all three cases, after two years he misses out on around €7,600 in principal repayments that he would already have made had he bought immediately. In return, he has not made any out-of-pocket contributions during those two years and has retained his own capital.

06When waiting can make sense — and when it does not

The decision depends less on the market than on your circumstances. These questions are more useful than any forecast.

07Risks and limitations

Neither prices nor interest rates can be predicted. The scenarios above are assumptions; reality could fall outside this range in either direction. Buyers may experience a price drop; those who wait may face rising interest rates.

The illustrative calculation also has limitations. It assumes full occupancy with no loss of rent, uses a simplified principal repayment calculation and assumes a fixed-rate period that extends beyond the first year. Once the fixed-rate period ends, refinancing may become more expensive. Other risks include vacancies, maintenance, special levies imposed by the owners’ association, and changes to tax or tenancy law.

Read more about interest rate risk in the glossary entries on interest rate risk and fixed-rate periods.

08Further reading

• Property bubble in Germany: what the data show
• Property value growth: what the data show
• Rental price trends and the rental price index
• Financing: tips for securing good terms
• Calculator: property purchase costs

09Sources

• Federal Statistical Office: Residential property prices in the second quarter of 2026, press release No. 336 of 24 September 2026 (accessed 14 October 2026)
• Federal Statistical Office: Inflation rate in September 2026, press release No. 348 of 30 September 2026 (accessed 14 October 2026)
• Eurostat: House price index, quarterly (prc_hpi_q), Germany, 2015 = 100, as at 1 October 2026 (accessed 14 October 2026)
• Deutsche Bundesbank: Interest rates and volumes for new business by German banks, housing loans to private households, as at 1 October 2026 (accessed 14 October 2026)
• European Central Bank: Key ECB interest rates, ecb.europa.eu (accessed 14 October 2026)
• § 32a EStG, §§ 7, 9, 21 EStG, §§ 3, 4 SolZG, gesetze-im-internet.de (accessed 14 October 2026)

Note: This guide provides general information and does not constitute investment, tax or legal advice. Scenarios are assumptions, not forecasts.